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Excessive debt, in part due to easy credit, is blamed for the credit crunch.
After several years in which Americans were buying stuff on credit they couldn't afford, a rapidly increasing number are complaining about getting harassed and abused by bill collectors.
Nearly 71,000 people filed such complaints with the Federal Trade Commission last year, roughly double the number in 2003. In addition, more than 14,000 complained to the Better Business Bureau. Thousands more lodged grievances with state and city officials.
"And it is going to get worse," warned David Polino, a Better Business Bureau expert on collection agencies and president of the BBB chapter in upstate New York. "With the recession, with the horrible credit problems, this is going to be off the charts."
Regulators and consumer groups say the rise in complaints reflects the rapidly increasing number of Americans who took on more debt than they could handle during the free-spending, easy-credit days that preceded the current economic crisis. The complaints are also being attributed to the explosive growth in the number of companies that buy up bad consumer debt at a discount and try to collect whatever they can.
U.S. law allows creditors to take aggressive steps to collect a debt, including going to court to freeze a debtor's bank accounts. But there are also rules: They may not call before 8 a.m. or after 9 p.m. They may not repeatedly use the phone to annoy you. They cannot curse or threaten to have you arrested. They cannot lie about the likelihood of legal action, or tack on unwarranted charges.
People who owe money are often themselves rude and abusive to bill collectors, use obscene language and hurl death threats. But under the law, bill collectors are not allowed to respond in kind.
Nearly 39 percent of the people who complained to the FTC last year accused an agency of either demanding a larger payment than legally allowed, or seeking money they didn't owe at all.
Bob Silvers of San Jose, Calif., said a company called Bay Area Credit Service has been hounding him over a disputed $60 ambulance bill from 2002 by bombarding him with calls that begin early in the morning and sometimes continue all day.
"I get between three and nine calls a day, six days a week," said Silvers, who claims the agency has ignored his demands to stop calling. "It's just constant harassment."
A spokesman for Bay Area Credit said he was unfamiliar with Silvers' dispute, but said it is against company policy to use the telephone to browbeat people.
West Virginia's attorney general sued a Florida company this month, accusing it of trying to intimidate people into paying delinquent cell phone bills by falsely threatening them with arrest, harassing their relatives and contacting their employers.
One 72-year-old retiree targeted by the company, Florence Gifford of Gypsy, W.Va., said she didn't believe she owed anything, but forked over $304 anyway after collectors used foul language and threatened to send a sheriff's deputy to her door.
In New York, authorities said one collector was recently disciplined for threatening to have immigrant debtors deported.
"We're starting to see more of the more serious types of harassment," said Jonathan Mintz, New York City commissioner of consumer affairs. His office investigated 1,277 complaints last year, up from 508 in 2004.
The collection industry is quick to point out that complaints don't necessarily equal improper conduct.
The company being sued in West Virginia, Charles Howell and Associates, denied its collectors had used bad language or threatened anyone with arrest.
"There's no lick of any sort of proof," said the company's president, Gregory Wells. "The only thing they have is the word of someone who owes money and is trying to get out of paying."
Rozanne Andersen, general counsel of ACA International, a trade association for debt collectors, chalked up much of the increase in complaints to America's growing debt problem.
According to the Federal Reserve, American consumers now owe around $969 billion in revolving debt -- the type of debt that people have on their credit cards -- compared with $770 billion in 2003.
Some 4.5 percent of all bank-issued consumer credit cards were delinquent in the second quarter of 2008, versus 2.4 percent in 1990, according to the American Bankers Association.
"There has been a tremendous increase in the volume of bad debts," Andersen said. "That is not an excuse, because we do take these complaints very seriously. But some of these complaints involve consumer misunderstanding of the law, or just frustration."
Regulators say many of the most serious complaints seem to be aimed at a particular type of debt collection agency: companies that specialize in buying old accounts that have defied all previous attempts at collection. There are hundreds of such companies, compared with as few as a dozen a decade ago.
These companies pay pennies on the dollar to acquire portfolios of "zombie debt" from phone companies, banks, health care providers and stores.
"We've seen people being pursued over debts that are 8, 9 or 10 years old," said Minnesota Attorney General Lori Swanson.
Those attempts to collect on older debts that have changed hands several times can be problematic, said the BBB's Polino. Some of the record-keeping on those accounts is so slipshod, he said, that collectors find themselves hounding the wrong people, or chasing accounts that were paid off long ago.
Swanson sued an Illinois debt-collection agency, AFNI Inc., in July, accusing it of failing to verify that old bills were legitimate before going after debtors. AFNI's vice president Jim Hess defended the company's efforts to verify debts and blamed some of the problems on an increase in identity theft.
Ernestine Williams, a 55-year-old widow in Morristown, N.J., walked into her bank over the summer to make a deposit, only to learn that her account had been frozen at the request of a company that purchased her delinquent Pep Boys repair bill.
The company is demanding $2,135 immediately to unfreeze her account -- an amount that includes about $400 in fees and interest on top of her original debt. Williams said she has had financial problems since her husband died and needs more time to pay.
"It's ludicrous," Williams said. "I'm trying to get back on my feet so I can pay my bills. It's embarrassing. I've already pawned all my jewelry. I don't have anything."